The group of ministers (GoM) on goods and service tax rate rationalisation has deferred reworking GST slabs, opting instead for a comprehensive review of rates across various categories, includes items taxed at 12 percent and 18 percent, the Times of India has reported.
The GoM, led by Bihar deputy chief minister Samrat Chaudhary, is examining sectors such as health insurance and restaurants where industry representatives have voiced concerns. The review may also extend to food products, with potential adjustments for branded versus unpacked items, including namkeens.
Despite a large number of items falling in the 12 percent slab, not much revenue comes from this slab, which is in contrast to the 18 percent bracket, which accounts for 73 percent of the taxes. A reduction of even three percentage points in this slab could significantly impact revenue, making it politically challenging to increase levies on 12 percent items, the reported cited sources as saying.
Moneycontrol could not verify the report independently.
The GoM’s decision to leave the slabs unchanged is expected to be shared with the GST Council at its September 9 meeting. Discussions will continue on rate changes for specific goods and services and then taken up by the council.
The online gaming industry has lobbied for a review of the 28 percent rate but an immediate relief appears unlikely due to resistance from several states and the Centre who argue that the higher levy serves as a deterrent and guards against excessive losses.
Similarly, the beverage industry has raised concerns over the future of the compensation cess.
Industry players have requested that rate adjustments be limited to twice a year to avoid disruptions. States such as West Bengal and Karnataka have opposed reducing the current four GST slabs.
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